“Last night in October” It is the old popular song lyrics that people often hear in October in Korea. This year, the last night of October is more special. It is because of the candlelight protests that lightened up Korean society from October last year to mid March this year. Koreans liken this to Britain’s Glorious Revolution. Those who participated in the candlelight protests are proud of this honorary revolution that took place peacefully and legally without any casualties. With this pride they no longer consider themselves as obedient lambs conforming to political power and market power, but are waking up as clever foxes which check and monitor two tigers, political power and market power.
In the midst of this situation, two of the most powerful people in Korea have been arrested and are being tried in the courts of law. One is former president Park Geun-hye and the other is Lee Jae-yong, vice chairman of Samsung Group. Lee Jae-yong was found guilty at trial, and the main reasons for the verdict were illegal transactions between Samsung Group and the people close to former president Park Geun-hye. The court stipulated that at the heart of this case is "the immoral collusion between political power and economic power." The arrest and prosecution of Lee Jae-yong shocked many people. In the aftermath of this incident, Samsung Group was reported to reorganize its corporate structure and dismantle its so-called government relations team. As Samsung is a reference point for many Korean companies, other chaebol and conglomerates are expected to follow.
In this state of affairs, companies doing business in Korea are faced with a fundamental question. "Should corporations only look at the government and the National Assembly and do nothing in the matters of various laws, policies and regulations?"
With dramatic political changes over the past year, liberal democracy and civil power in Korea will be stronger than ever. This growing civil power not only influences the political sphere, but also requires corporations to "take responsibility as a decent corporate citizen." In addition, the citizens who are awakened as the main agents of social activities are obviously awakened as influential consumers. To illustrate this social change, since the opening of the 20th National Assembly, out of the 912 corporate-related bills that have been initiated, 612 cases are related to corporate regulations.
The external environment surrounding businesses is largely divided into market and non-market environments. The non-market environment such as regulations and norms, along with the awakening of consumers, has more and more impact on the existence and scope of business activities as much as the market environment does. It is easy to find cases where a globally renowned company failed in Korea due to conflicts with stakeholders and civil organizations as well as insufficient legislation. As seen in the Oxy case, the forces of civil society and consumers also shake the existence of corporate activities and create new agendas constantly. By contrast, the importation of U.S. beef, which triggered a massive candlelight protests in Korea in 2008, has been steadily growing since the difficulties of the non-market environment have been successfully overcome through steady efforts of related industry associations.
Now, in Korea, not only corporate economic activities but also social and political activities should be elevated as a matter of strategic business activities based on corporate social responsibility and be managed accordingly as referred to as “public affairs” by communication experts. Awakened consumers are subjects of public opinion and present their opinions about companies and products through SNS, and their opinions are easily organized through public sympathy. Then the press and politicians accept this organized public sympathy, and a corporate problem becomes a social and political problem. Just as an organism must adapt well to its surroundings to survive and evolve, a company, as a social organization, can grow steadily by communicating well not only with the market but also with the non-market environment. As the business environment becomes increasingly complicated, a company’s response thereto should be more sophisticated in line with the values sought by Korean society.
Lee Bo-hyoung is CEO of Macoll Consulting Group.
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